A blog on recent and topical developments in corporate transactions law by Jim Rench, corporate partner with Stark & Knoll in Akron, Ohio.

Wednesday, November 28, 2007

Red, White & Blue Plate Special: Foreign M&A Surges in U.S.

November 27, 2007, 3:59 pmPosted by Dana Cimilluca, Deal Journal - WSJ.com:The Redcoats are coming — again.The weapon of choice in this British invasion, however, is money, not muskets, and the targets are companies, not rebels. U.K. companies have struck $46 billion of acquisition deals in the U.S. this year, more than any other country, according to Dealogic. That compares with just $34 billion in all of last year (when our former parent country ranked third after Canada and France.)The Brits aren’t alone this year, however. Since the global merger boom began in around 2003, there has been a steady increase in the percentage of U.S. acquisitions made by foreign companies. Their share of such deals has increased to 20%, from 11% then, according to Dealogic. Even as the M&A engine in the U.S. sputters along with instability in the credit markets, foreigners keep snapping up U.S. assets, as highlighted by the Abu Dhabi Investment Authority’s surprise $7.5 billion investment in Citigroup.What draws these overseas neighbors to our shores? The overflowing coffers of the state investment funds in countries including China and Abu Dhabi are part of it. The sharp decline in the U.S. dollar can’t hurt either, as it reduces the cost of U.S. deals for acquirers using euros, pounds or yuan.Of course, given the fickle nature of the U.S. dollar and oil prices — whose marked movements have helped shift the M&A landscape — there is no guarantee they are here to stay. After all, in 2000, foreign deals accounted for 22% of all U.S. M&A, only to fall to 11% three years later as the tech bubble sent foreigners scurrying like the British after Yorktown.

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Jim Rench is a Partner in the law firm of Stark & Knoll Co., L.P.A., Akron, Ohio, where he is a member of the Corporate Practice Group.Mr. Rench received his undergraduate degree (B.S. in Business Administration - Accounting and Finance) from Miami University, Oxford, Ohio, and his law degree, (J.D., magna cum laude, Order of the Coif) from The Ohio State University, College of Law.Mr. Rench has enjoyed a Martindale-Hubbell rating of “av” for many years and has been recognized in Best Lawyers in America (Banking Law) since 1995 and in Ohio Super Lawyers (Business, General) since 2004 . He is a member of numerous Bar and professional associations, including the National Association of Corporate Directors and the Association for Corporate Growth.Mr. Rench has substantial experience representing clients in corporate and commercial matters, including entity formation and governance, securities and corporate finance, secured lending, and mergers and acquisitions.